Studies

Academic and legal studies

This paper answers some legal arguments of those who claim that the expiry of paragraph (a)(ii) of Article 15 of China’s Protocol of Accession to the WTO requires that WTO members treat China as a market economy. The paper shows that there is no basis to challenge that the surviving parts of paragraph 15 a) include a NME presumption and that the legal basis for such presumption is represented by the national laws of the importing WTO members. The expiration of subparagraph 15 a) (ii) does not affect the alternative methodologies applied by the importing WTO Members nor the right to resort to this instrument. The explanations provided by those who oppose to the continued application of the presumption under the domestic laws of the importing WTO Members lack textual support and violate the principle of effective treaty interpretation.

F. Martín Malvarez is a lawyer graduated from the University of Buenos Aires (1977). Former legal clerk for the Argentine Supreme Court of Justice. Head of the International Legal Trade Department of the Techint Group. The author has participated in trade defense cases in Argentina, Brazil, Guatemala, Mexico, the United States, Canada, the European Union, China, Indonesia and India. The author has also participated as an advisor in some WTO disputes. The views expressed in this paper are entirely the author´s.

Independent study "Unilateral Grant of Market Economy Status to China Would Put Millions of EU Jobs at Risk" by Economic Policy Institute reveals that "EU decision to unilaterally grant MES to China would put between 1.7 million and 3.5 million EU jobs at risk."

A landmark study by the Economic Policy Institute (EPI) released on 18 September 2015 reveals that if the EU grants Market Economy Status (MES) to China, the EU could lose up to 3.5 million jobs and 2% of GDP. If the EU surrenders to Chinese pressure for Market Economy Status, Europe would permanently lose the ability to set proper anti-dumping measures on unfairly dumped Chinese imports. Such a capitulation would severely damage the competitiveness of EU manufacturing industries, undermining still fragile European economies.

Professor Robert E. Scott, author of the study and Director of Trade and Manufacturing Policy Research at EPI, commented on his findings saying, “Abandoning the possibility of obtaining relief from state-financed dumping would expose EU producers to a flood of cheap products from China, destroying employment and business investment in manufacturing.”

The EPI study calculated that MES for China would directly put at risk up to 1 million European jobs in affected industries, with knock-on losses of 1 million additional indirect jobs in related sectors. Subsequent negative income effects could lead to as many as 3.5 million job losses over the next three to five years, according to EPI. The hardest hit countries would be Germany, Italy, UK, France and Poland.

Professor Dr Markus Taube, authored the study entitled, Assessment of the normative and policy framework governing the Chinese economy and its impact on international competition.

The study supports the view that China does not merit the ‘Market Economy Status’. If the EU would grant such status, as requested by China, its ability to act against heavy Chinese dumping would be severely undermined. From the perspective of European industry, over the next few years this would result in the loss of millions of EU jobs, green production and innovation.

The study was presented on 25 June 2015 by the European industry alliance AEGIS EUROPE to Members of the European Parliament. Concluding his presentation, Prof. Dr Taube stated that, "China is not a market economy; state planning and subsidisation are in China’s DNA".